Exam 1: What Is Economics?

Suppose Canon Inc. decided to invest 45 billion yen in developing and launching a new model of its digital camera, expecting that it will bring additional sales of 60 billion yen. The company has already invested 38 billion yen when the marketing department suddenly finds out that the introduction of a similar camera by Sony will reduce Canon's expected additional sales to 30 billion yen. The company's management is trying to decide whether to continue investing in the new product or close the project. Canon hires you as an economic consultant. So, think like an economist to help the company's management make their decision: a)At this point in time, what is Canon's marginal cost of introducing the new product? b)What is Canon's marginal benefit from introducing the new product? c)Will you advise Canon to finish the project and introduce the new product? Why or why not? What principles of economic thinking will help you analyze the situation and make the right choice?

-In the above figure, which curve indicates that the level of food production does not affect the population growth rate?

Suppose we are considering the relationship between two variables y and x. y is measured on the y-axis and x is measured on the x-axis, and the relationship between then is a straight line. Suppose that the slope of the line is positive and is less than 1. This slope means that a change in x is associated with

Which of the following is an example of a positive statement?

The fact that some people can afford to live in beautiful homes while others are homeless, is most directly an example of an economy facing the ________ part of one of the two big economic questions.

-The above figure reveals

Marginal cost is the cost

Which of the following is a positive statement?

In the U.S. economy, which of the following statements is TRUE?

-The above figure shows the relationship between the Joneses' total consumption and total household income. The figure illustrates that the Joneses' total consumption varies

-The slope of the line in the above figure is

"As the price of gasoline increases, fewer people buy cars that are gas guzzlers." A graph showing this relationship would have

Which of the following is NOT a normative statement?

Which of the following is an example of a positive statement?

-In the above figure, using the slope across an arc, the slope of the curve between points a and b is

When a textile company keeps track of its inventory using a computer and its competitor uses a pad of paper and a pencil, they are both answering the ________ part of one of the two big economic questions.

-The above figure plots income and consumption in a nation. In 2007

A scatter diagram plots the value of one economic variable against time.

The study of the choices made by individuals is part of the definition of

-The slope of the line shown in the above figure is